I was fascinated by seeing recent talk by “calculated risk” (is it a “bubble blog”?) of the game contemplated by people walking away from mortgages. Musical houses may be next?

That’s where you walk away from one overpriced house at nearly the same time as you buy a foreclosed (or REO) property nearby for a lot less. Then your neighbor can move into your house doing the same thing, and so on …

When the music stops playing everyone who actually wants to live there has moved a short distance into a probably comparable house at a fraction of their former house price / payment.

In the past apparently opportunities arose to do this in ‘mill towns’ or ‘company towns’ when a major negative employment event occurred causing housing prices & demand to drop. and occur they did! Within the span of a few years everyone shuffled into similar houses at a fraction of hte previous price.

If you have a job, plan on staying, and are not generally dependent on credit scores to finance cars, etc. then it may be worth the potentially enormous savings if you have a large non-recourse mortgage. I guess you have to purchase the second home (at like 50% off) with a good down payment (cash) prior to walking from the first. I don’t know how this can be pulled off (the details) but it has happened so i’m told. Like a game of musical chairs.

Anybody know if there will be opportunity for home-debtors to do this again in steeply-depressed priced markets in Michigan today? I have excellent credit!